The Hospital for Healthy Living (HHL) financial statements are in the Excel file named CH18_Financials_Tem-plates at this books companion website. During fiscal year 2019, HHL decides to outsource its information technology services to another company. By out-sourcing, HHL will be able to get rid of certain services and staff that cost the hospital $175,000 annually. There is an upfront cost to undertaking this venture, because the company must set up servers, backup systems, and e-mail accounts for HHL. Then, there are annual contract payments that HHL must make with the IT company. The board of directors has agreed to a 4-year con-tract. Management is entertaining bids from two companies. The first requires a $250,000 payment for the initial con-version and $100,000 per year thereafter. The other bid requires a $350,000 payment up front but only $75,000 annually. HHL has a 6% cost of capital. Which option should HHL choose?